Property Investment & Wealth Creation Australia | The Michael Yardney Podcast

Australia's economy and our property markets don't operate in isolation, and Inflation is occurring all around the world, so that's why each month I take time out to have a look at the big picture, the macroeconomic factors affecting not just Australia's economy, but the world economy, to help us understand what's ahead for us, and I record these Big Picture Podcasts with Pete Wargent once a month. Will inflation send interest rates sky-high? Australia's inflation rate has predictably increased sharply again over the March quarter to the highest level reported since the introduction of the GST impacted prices back in 2000. So, what does this mean for interest rates, property markets, and their economy in general? Inflation We really must start the discussion today with the high inflation number - headline CPI increased 2.1% over the last quarter giving us an annual rise of 5.1%. This came in to be higher than what most market commentators expected. The primary driver of the inflation outbreak was related to increases in the price of fuel and housebuilding costs. Supply constraints are struggling to match demand from Covid stimulus policies The Ukraine war raised the price of oil to record levels in the March quarter Is it time for a rate rise? Interest rates will start to go up because of the inflation rise. It's not surprising that some commentators are looking back at the 1970s and 1980s when the Reserve Bank used interest rates to stop rising inflation which eventually led to a recession in the early 1980s and then again in the early 1990s. Interest rate hikes should be considered and gradual, the Reserve Bank has learned from the past. Interest rates will need to rise to keep Australia's dollar stable Inflation is a feature, not a bug. It's there by design and it's useful for those who own assets This is what will reduce the fall in house prices While it is well known that falling interest rates stimulate our housing market and push property prices up, and in time cash rate hikes have a negative impact on housing prices, that does not mean that cash rate hikes always cause a fall in housing prices. Strong employment and wage growth outlook will cushion the fall in house prices. Indebted households have very high savings levels which will limit the possibility of mortgage stress. Stronger regulation has reduced financial stability risk. A small percentage point increase in rates will have a relatively stronger impact on interest payments than when the cash rate started higher. Residential property borrowers have squirreled away a record $232 billion in offset accounts in the past 12 months The property boom is cooling down House price growth across the combined capital cities is 10 times slower this quarter compared to last, suggesting the property boom is on the cool down. Despite a slowing market, combined capital median house prices are at a new record high of $1.07 million. Units across the combined capital cities declined (1%) for the first time since June 2020, recording a median price of $616,942. Regional Australia is outperforming the cities for house price growth as the regional median house price increased by 3.1% over the last quarter and 20.8% annually. House prices in Melbourne and Canberra fell 0.7% and 0.9% from last quarter's record high. This is the first quarterly fall since the June 2020 quarter for Melbourne and the March 2020 quarter for Canberra. Perth has achieved a new record high house price for the first time since 2014. Brisbane and Adelaide are the only cities to have record-high unit prices, while Sydney, Melbourne, and Hobart units fall from the record high achieved in the previous quarter. This is the first time unit prices have declined in Sydney and Melbourne since mid-2020. Environmental risks are higher on the property market agenda. Have you ever considered climate change in the context of your property investments? Bush fires and floods have been very significant events in Australia over the last few years, and while the recent floods in Queensland and New South Wales were labeled a once-in-a-century event, I remember the Brisbane floods of 2011 very well. Climate experts have suggested that severe weather events may occur more frequently in the future. Moving forward, some areas may cost a lot more to insure. Others may be uninsurable. 3.5% of dwellings in Australia could be exposed to an elevated risk of climate-related events, and by the end of the century, that could increase to 8%. You have to consider these things, especially in high-risk areas. Links and Resources: Michael Yardney Metropole's Strategic Property Plan – to help both beginning and experienced investors Get a bundle of free reports and eBooks – www.PodcastBonus.com.au Pete Wargent's new Podcast Shownotes plus more here: The Big Picture – economic and property trends you must understand with Pete Wargent Some of our favourite quotes from the show: "Everyone knows that the cost has gone up. It's not just the petrol, even though that's come down a bit, but the cost of everything." – Michael Yardney "In the past when interest rates went up, they went up too much too fast – easy to say in retrospect." –Michael Yardney "Even though we're borrowing more, overall, Australian's households are in very good condition." –Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

If you were asked to list the top global news stories of the last year, off the top of your head, what would they be? Chances are you'd come up with some combination of COVID-19, lockdowns, economic woes, political conflict, floods, and other natural disasters, and maybe Free Britney thrown in for good measure. What's probably missing from your list is any good news, which seems pretty strange. Even in the midst of a global pandemic, surely a few positive things happened over the last year. So today I chat with Mark Creedon and we'll show you the world is not such a bad place to live in. Good News In 2021 It's not hard to find bad news in the media, and it's been said our brains are hardwired to look for the negatives. Today we're going to share some positive news stories you might have missed to brighten your outlook for the future. Now we could start off with the fact that the average Australian is wealthier than ever before and that over the last two years of the pandemic, the value of many homes has increased by at least 20% and in many cases 30%. And we could talk about the fact that anybody who wants a job can get a job in Australia. And we could of course talk about how while, unfortunately, some businesses are still suffering many businesses doing really well and will get to these at the end. But let's start with some big-picture good news stories. Let's kick off with by far the biggest good news story of the year: the COVID-19 vaccines. This is by far the most successful global health initiative ever undertaken. In less than two years not only did we come up with a way to overcome a brand new disease but rolled it out to more than half of humanity. Lots of good news on cancer this year. The American Cancer Society said there was a 2.4% decline between 2017 to 2018 — the largest one-year drop ever — and that between 1991 and 2018, cancer mortality has fallen by 31%. A lot of that is down to less smoking. The latest data on AIDS revealed there were1.5 million new HIV infections last year, a decline of 30% since 2010, and the lowest total number since 1990. 4. Stroke is the second-leading cause of death worldwide, and the third-leading cause of death and disability combined. New research released in September this year revealed that quietly and largely uncelebrated, we've made amazing progress, with the age-standardized number of cases decreasing by 17%, and deaths by 36% in the last two decades. Life expectancy has improved around the globe. Today most people in the world can expect to live as long as those in the very richest countries in 1950. The United Nations estimates a global average life expectancy of 72.6 years for 2019 – the global average today is higher than in any country back in 1950. According to the UN estimates the country with the best health in 1950 was Norway with a life expectancy of 72.3 years. Life expectancy in Australia continues to rise, with a baby boy expected to live to 81.2 years and a girl to 85.3 years, according to the latest figures released from the Australian Bureau of Statistics Worldwide, democracy appears to be under threat, but remember — bad news travels, good news doesn't. When Indonesia, the world's most populous Muslim country, produces the planet's most effective democratically elected leader — Joko Widodo — almost no one hears the story. Some of Australia's most beautiful natural sites, including the Daintree, the oldest tropical rainforest in the world, were returned to their traditional owners this year. A significant majority of people in wealthy countries now believe that having people of different ethnic, religious, and racial backgrounds improves society. In India, millions of people have gained access to clean water in the last two years. About 11.2 million, or 38% of all households in disease-vulnerable regions now have access to clean water, up from 2.9% in 2019. Look how many electric cars are being sold: 10% of global vehicle sales are now electric. More than a third of new German cars sold are now plugins, while in the world's largest car market EV sales have reached nearly 20%. In October 2021, the Tesla Model 3 was the bestselling car in Europe - not the bestselling electric vehicle — the bestselling car, overall The average Australian is wealthier than ever It's been suggested there is a war chest of $230 Billion in household savings Many homeowners have 30% more equity in their homes than they had 2 years ago Aussie super funds and shares portfolios are performing well Overall the total residential property market is worth close to $10 trillion and there is only $2 trillion worth of loans owing against all residential real estate. Links and Resources: Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Why not join Metropole's Business Accelerator Mastermind Learn more about Mark Creedon – Business Coach to some of Australia's leading entrepreneurs Get a copy of Mark's new book here – Have a business not a job Get your free bundle of reports and eBooks – www.PodcastBonus.com.au Shownotes plus more here: What went right over the last year. Some good news stories with Mark Creedon Some of our favourite quotes from the show: "I recently read a study that said that scientists found that living near leafy green areas cuts your risk of stroke." – Michael Yardney "Pessimists are usually not successful in life." – Michael Yardney "I think with our borders being open and more migrants coming in, that's only going to push up our economy, it's going to push up our housing market, it's going to fuel businesses, give people the opportunity who aren't getting staffed to get jobs." – Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

If you're interested in becoming a successful property investor, my chat today with leading demographer Simon Kuestenmacher will be of real benefit to you, because we're going to talk about a demographic trend that is critical in understanding how our property markets will work moving forward. What is this trend? Probably not the trend you're thinking about. It's homeownership. Considering homeowners make up 70% of our property markets, I think you'll benefit from today's chat. Home Ownership Demographic Trends We often talk about Australians' passion for homeownership and how we are different from other parts of the world but are we really? Is Australian home ownership comparable with homeownership internationally? BY international comparison, the Australian homeownership doesn't appear to be overly high or low. Largely agrarian and industrial economies like Romania, Hungary, and Bulgaria have high homeownership rates, while highly urbanized service economies (Switzerland, Germany, South Korea) have relatively low homeownership rates. What does the census say about the percentage of renters in Australia? In 2006, only 26 percent of Australians (individuals not households as measured by the OECD) lived in a rented dwelling and by 2016 this number increased to 30 percent. Sure, today more people choose to rent as they move frequently for work opportunities (especially in their 20s and 30s before they have kids). What's happened to the percentage of homeowners based on age group over time? People born in the late 80s/early 90s have a homeownership rate of 37%. Their parents' generation was 50-55%. Every generation has a lower homeownership rate than the one before it. The two big benefits of homeownership: 1.) Owning a home is the most important factor in staving off poverty in old age. 2.) A homeowner builds the best house they can possibly afford. An investor or developer purchases the cheapest thing they can get away with. Homeowner homes are therefore of better quality. The type of houses Australians built in the past is very different from the modern home of today. Migrants have brought their preferences and styles with them and have changed the way homes look and the way we live. That is likely to continue. With our governments having a business plan to increase their population by around 40 million people by the middle of the century, that will impact what the home of the future looks like? Links and Resources: Michael Yardney Simon Kuestenmacher - Director of Research at The Demographics Group Simon's article on Home ownership in The New Daily As our markets move forward why not get the team at Metropole to build you a personalised Strategic Property Plan – this will help both beginning and experienced investors. Shownotes plus more here: Homeownership trends property investors must understand, with Simon Kuestenmacher Some of our favourite quotes from the show: "Australians seem to be obsessed with homeownership." – Michael Yardney "The modern home of today is very different." – Michael Yardney "You'll never regret taking a vacation, engaging in a new hobby, or spending a day with those who make you happy." – Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

How should you choose the location of your next investment property? And what are the floods going to mean for Brisbane property values? Those are two of your questions we answer in today's question and answer session with Brett Warren. In the end, you're going to learn a little about how we put our strategic property plan together to help Russel B left the following question – "Thanks for the great Podcast – I really love it – can I please ask a hypothetical question? If an investor had a spare $1m, where and how should they spend it? In the bigger capital city markets where the median property prices are now $1m (or close to) - where would their money be better spent? In the capital cities or further out where they can get more bang for their buck? Any areas that should be avoided at all costs?" While that's a good question - I'm afraid that's the wrong question, a shallow question, even though that's where most property investors start their journey. However, statistics show that around 50% of all property investors sell up in the first five years, and of those that stay in the market, 92% never get past their first or second investment property. So, if you want to outperform the average investor, if you want to develop financial freedom through property investing, then don't start by selecting a location, or looking for that ideal property. What makes a great investment property for you is not likely to be the same as what would suit a different investor at a different stage in their investment journey or with a different risk profile or with a different size portfolio behind them. The correct order is, to begin with, the end in mind - what do you want to achieve with your property portfolio and then build a Property Plan to get you there. So, my first recommendation to anyone asking where to invest is to sit with an independent property strategist to formulate their plan. When you invest in property there are really only three major levers you can pull: Your budget – and that is usually determined by the banks. Location and you can't afford to compromise on that. The right property in that location. And unless you have an unlimited budget, and that applies to very few of us, investors usually need to compromise on at least one of the above. So back to the original question – what makes a great property investment location? It's impossible to say this location is perfect for everyone. When selecting a location, I would initially start by eliminating locations. I suggest you should only consider investing in Australia's big three capital cities. I'm also saying that it's important to be very selective in choosing suburbs in these cities – investment grade suburbs that are likely to outperform. I recommend looking for an area that has a long, proven history of strong capital growth and is likely to continue to outperform the averages. In general, there are 3 types of property. A-Grade homes and "investment grade" properties are the type of assets you want to own, and the type of properties where great tenants want to live, not because they need to, but because they want to and are prepared to pay extra to live there. B grade properties still have a lot going for them, and during hot property markets like we are currently experiencing they still perform well, but their second location within their suburb or the less than perfect attributes of these properties mean they will slump more in downtimes. C grade properties – these are to be avoided unless they're in a great neighborhood and your intention is to demolish the property and replace it with something more appropriate for the location. Having said that can you give us some thoughts about how to invest that hypothetical $1million Sydney With the median house price in Sydney being well over $1 million, it would be hard to purchase an investment-grade house in a great location in Sydney, however, this budget would secure a family-friendly apartment in one of Sydney's high-growth suburbs. This makes "family-friendly" low rise, medium density apartments a great investment in Sydney's eastern suburbs, the Inner West or Lower North Shore. Melbourne Like in Sydney, $1,000,000 won't buy an investment house to get a great Melbourne, however, it would buy a townhouse which would make a great long-term investment. As rising property values create affordability issues more Melburnians are moving to townhouse living and getting modern large accommodation on compact blocks in Melbourne's inner-ring suburbs. Brisbane Brisbane has been one of Australia's top-performing property markets over the last 2 years and moving forward, Brisbane house prices are likely to continue to grow strongly. The Sunshine State is shining and strong demand for detached houses and outstanding demand for lifestyle areas means as an investor, if you buy the right investment property in the right location, you could be primed to supercharge your growth. $1 million would be a good home in an inner Brisbane suburb. The Bottom Line Rather than asking where I should invest or what sort of property should I buy, the questions you should be asking are: What do I want to achieve from my property portfolio? What do I need to do to get those results? And… Who do I need on my team to help me achieve the financial freedom I want with minimal risk? The Brisbane Floods and What They Mean for Property Prices Moving Forward. What will flooding mean for the Brisbane property market? Flooding was supposed to be a once in a 100-year event and here we are just a decade out from the last round of floods. In the past few weeks and the coming months, it is important to support those in need of assistance and provide a level of compassion. But for property buyers and investors, one can't help being anxious about what another flood event will mean for our property markets moving forward. But, by understanding several key factors, you can gain back a greater level of control and certainty and move forward with confidence. Economic Environment In 2011, there were barely any jobs being created and this trend continued with further natural disasters and mining downturns throughout the decade. Employment growth then started to ramp up significantly from late 2017, with an estimated $16 billion dollars of infrastructure spending set to create 100,000 jobs alone in Brisbane. With jobs on offer migration steadily started to build from circa 5,000 in 2011, skyrocketing to the north of 16,000 today and creating record demand for housing in a low supply environment. Demand has been consistently at above-average levels for quite some time now, especially when compared to 2011, while supply has fallen. I would not expect to see demand fall too much, but with the floods now taking a layer of supply away from the market these flood-free suburbs will just see greater demand. Put simply, we are in a considerably better position to bounce back more quickly from these floods this time around. Moving forward, how do you invest with confidence in this post-flood environment, and what are the lessons from the past? From a macro perspective, start with the bigger picture, understand the driving factors for property prices and invest with greater economic and employment activity. From a micro perspective, do not take any chances and only invest only in dry, flood-free, and stormwater-free locations. While history will show us that areas that are flood-affected will still recover, it will just take time and in this environment, likely less than before. It emphasizes that property should be a longer-term investment and that time in the market is much more important than getting the timing right in the best possible locations. Links and Resources: Michael Yardney Brett Warren – National Director Metropole Property Strategists Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Get a bundle of eBooks and reports - www.PodcastBonus.com.au Shownotes plus more here: Q&A Day – Where should I buy my next investment property? With Brett Warren Some of our favourite quotes from the show: "In my mind, property investing is a process, not an event. And it has to be done in the right order." –Michael Yardney "Townhouses are really in strong demand in Melbourne with owner-occupiers and definitely with tenants." – Michael Yardney "When you do your due diligence, it's not just floodwater that you're looking at, it's also stormwater and overlays that don't occur as much in other states." – Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

The media is full of concerns about the future of our property markets, so in today's podcast I'm chat with Ken Raiss, Australia's leading property tax accountant about the future of our markets and why we believe you shouldn't be concerned. I know there are lots of commentators out there who have a different view, but Ken has been involved in property almost as long as I have and if you've been regularly following this podcast or my blogs on Property Update you'll know that we have been pretty accurate in our forecasts over the last couple of years, so today we'll discuss how Covid changed our property markets, what's currently happening on the ground and what to look forward to. At the end of today's show, I hope you'll have more clarity on what's ahead. The Future of Our Property Markets Now that life is getting back to what some of us would call Covid Normal the housing markets are changing in front of our eyes. So how have our markets changed and what will the main drivers of our property markets be moving forward? That's what I want to chat about today with Australia's leading property tax accountant Ken Raiss director of Metropole Wealth Advisory. Let's first start by exploring some of the major impacts of the pandemic on the Australian housing markets over the last 2 years. Australian home values rose 25%, to record highs Despite negative predictions, last year was an extraordinary year in the housing market – around 98% of locations around Australia recorded rising property values with many properties rising in value by more than 20%. Before COVID-19, the ABS valued Australia's residential property at $7.1 trillion. It ended in 2021 with a valuation of $9.1 trillion. To put it another way, the growth in property wealth in the past two years is higher than all the gains over the decade before COVID-19 (2010-2019) combined. But that was an extraordinary market – a once-a-generation property boom, and this year property markets will behave differently. They will both behave more normally and be more fragmented First homebuyer activity spiked From June 2020, first home buyer activity surged amid the introduction of the HomeBuilder scheme, used alongside the First Home Loan Deposit Scheme, as well as other state-based grants and stamp duty concessions for first home buyers. The result was a spike in first home buyer activity, which peaked in January 2021. The spike mirrors first home buyer participation in 2009-10, which marked a temporary boost to the First Homeowner Grant. Since the January 2021 peak, first home buyer activity has diminished, reflecting higher barriers to entry as housing values substantially outpace incomes. Rents rose 11.8% to record highs, while gross yields fell to record lows There are multiple reasons rents have risen. Investor activity had been relatively subdued between 2017 and mid-2020. Rental supply may also have been eroded through the rise of rental services like Airbnb. This trend may have been particularly prevalent in tourism destinations across Australia, some of which have flourished amid a rise in domestic tourism in the past two years. Rents may have increased due to higher purchasing prices for investors who have recently purchased long-term rental accommodation. Over the course of 2021, annual rent value growth was at its highest level since 2008. The headline numbers hide the diversity of rental conditions. There has been a clear shift in rental preferences toward lower-density housing options through the pandemic, where the upwards pressure on rents has been more substantial. This trend has evolved over the past year, with rental affordability gradually deflecting more demand towards higher density rental options where the cost of renting is more affordable. Housing debt levels hit record highs Rapid increases in housing and rent values in the past two years were largely the result of a sizable reduction in the official cash rate. However, it is important to frame debt levels in the context of high asset values, and relatively low interest costs. RBA data shows housing interest payments to income have fallen to their lowest levels since 1999, and household debt has trended lower as a portion of housing values. The premium of house prices compared to units hit record highs Both the composition of the buyer pool and the impacts of COVID may have contributed to a record gap between house and unit values. Investors, who may have a preference for units, have been a relatively small part of demand through the upswing. Additionally, detached houses may have been in higher demand as Australians spent more time at home through the pandemic. Government policies such as the HomeBuilder grant may have also contributed to increased detached housing demand, due to tight construction timelines to qualify. The result is a record-high gap between house and unit values. The rise of the regions Migration trends over 2020 and 2021 revealed an uptick in the volume of people leaving cities for regions outside of lockdown periods, and a decline in people leaving regions for cities. The result has been higher than normal housing demand against unusually low levels of listings across regional Australia, in both the sales and rental market. Where to from here? The current housing market upswing has delivered extraordinary value gains, providing a significant wealth boost for homeowners, but larger hurdles to enter the market for non-homeowners. But since April of 2021, monthly gains in national home values have softened. Arguably, there are more headwinds than tailwinds now stacked against continued growth in the property market, with the potential for sooner-than-expected cash rate increases, affordability constraints, and weakening consumer sentiment slowing demand. While some structural shifts through the pandemic, such as remote work, may sustain demand in regional Australia long term, it is likely that housing values will start to decline on a fairly broad basis later this year. Links and Resources: Ken Raiss- Director Metropole Wealth Advisory Get Ken Raiss to build you a Strategic Wealth Plan Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Get your bundle of eBooks and Reports at www.PodcastBonus.com.au Shownotes plus more here: Stop worrying about the future of our property markets, with Ken Raiss Some of our favourite quotes from the show: "Interestingly, some tenants became first homebuyers, I think that's one of the other big trends that happened during COVID." – Michael Yardney "Houses will always be more expensive than apartments, but I can see a catch-up for the right sort of apartments and values." – Michael Yardney "What brings the seeds of success to life is the pursuit of a dream and the goals behind a dream." –Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

Last year was an extraordinary year for many homeowners and investors when their property values went up more than they owned in everyday regular income. Clearly, the market's changing. When the property market's booming, everyone's an investment genius. But when the property market's different, I think it's really important to listen to those who've got a perspective – who've lived and invested through many different cycles. That's why I'm talking to property researcher John Lindeman today. John believes that property values are going to keep rising. I know that's contrary to what some of the big bank economists are suggesting, so it will be interesting to hear his thoughts. In his recent report, John's gone back to 1901 to look at the statistics. He isn't just somebody thinking about property and telling you what's going to happen – he's done careful research to see what happens to property values when interest rates rise. At the end of today's show, I hope you'll have more clarity about what's ahead for today's property markets. Why property prices will keep rising Last year around 98% of locations around Australia recorded rising property values with many properties rising in value by more than 20%. Interestingly the Australian Bureau of Statistics said that the value of Australia's property portfolio skyrocketed to $9.9 trillion in 2021, driven by a record-shattering 23.7 percent annual rise in property prices. The collective wealth of homeowners increased by $2 trillion in just one year alone – a sum 30 percent larger than the annual output of the entire Australian economy. The growth in property wealth in the past two years is higher than all the gains over the decade before COVID-19 (2010-2019) combined. Some bank economists are predicting that house prices will fall this year or in 2023 as interest rates increase, but property market analyst John Lindeman explains why property prices will continue to rise. Economists are concerned that the Reserve Bank will soon raise interest rates to slow down inflation because inflation is very hard to reign in once it takes hold. They believe that higher interest rates will make housing less affordable, and that lower buyer demand will then push prices down. It seems to make sense that higher borrowing costs will reduce buyer demand and therefore prices will fall. But it's hard to test this theory because interest rates have gradually declined since 1990 when the standard variable home loan rate was all the way up to 13.5%. For over 30 years property prices have grown and interest rates have fallen. There certainly is a strong correlation between falling interest rates and rising property prices, but does this mean that the reverse is also true? How can we be sure that if interest rates rise, property prices will fall? In the last 30 years, property prices did not fall when interest rates rose One-third of our housing is fully owned, with mortgages having been paid off and no remaining debt. The owners are mostly older couples living in empty nests and when they sell, it will be to downsize. So, interest rate rises are of no concern to them. Another third of our housing stock is owned by investors who can claim the cost of housing finance interest against all their other income. This means that interest rate rises reduce the amount of income tax they pay. They can also raise asking rents on their properties to recoup the cost of any interest rate rises. Only one-third of our residential properties have mortgages that are being paid off by owner-occupiers. Most of them purchased their homes many years ago when rates were much higher than they are now. Their financial situations have improved since then and they have probably paid down some of their debt, so a rise in interest rates is manageable Only first home buyers are badly impacted when interest rates rise Some highly leveraged recent first-time buyers in new outer suburban first home buyer areas may experience mortgage stress when interest rates go up. If enough of them are forced to sell, and the number of potential first home buyers also falls, there is a risk that property values in first home buyer locations may fall. But first home buyers only comprise around one-tenth of all homeowners, and despite the personal and social impact of such events when they have occurred in the past, local markets have always bounced back into growth within a few months. The only times when housing prices went backward were during the First World War, the Great Depression, the Sixties Credit Squeeze, the Recession "We had to have", the Global Financial Crisis and most recently, because of APRA restrictions on the amount of housing finance that investors could obtain from the banks. The aim of interest rate rises is to curb inflation, not hit housing prices Because rising interest rates only impact a small percentage of homeowners, we should look at the reason that they are increased, which is to slow down the rate of inflation. Is there a link between rising inflation and housing prices? Housing prices have always moved in sync with the rate of inflation. Housing prices have historically tended to move more vigorously than inflation rates but always in the same direction. In periods of rapidly rising inflation such as the post-war years and the seventies hyperinflation years, housing prices experienced their most dramatic price growth in our history. In summary, interest rate rises only impact a small percentage of property owners, while property prices on the whole rise whenever the rate of inflation increases. If inflation goes up this year or next, so will property prices. Links and Resources: Michael Yardney Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us John Lindeman of Lindeman Reports Read John's article referred to in the Podcast here Get a bundle of free eBooks and reports at www.PodcastBonus.com.au Shownotes plus more here: Don't worry. Here's why property prices will keep rising, with John Lindeman Some of our favorite quotes from the show: "It's going to be a more fragmented market this year, I think, moving forward." – Michael Yardney "I think the Reserve Bank's also learned lessons from the past about raising interest rates." – Michael Yardney "So much of the drama that people go through in their careers and their personal life and their investing is avoidable if they listen to the signs the first time around." – Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

Maybe you're too biased to become a successful property investor? What do I mean by that? Well…did you know that we can sometimes be our own worst enemy as property investors? It's not because of the decisions we make, the opportunities we consider, or the investments we miss out on, but rather, it's due to the way we think. brains. By the last count, I've read that there are 188 types of these fallible mental shortcuts in existence, and they constantly impede our ability to make the best decisions about our careers, our relationships, and for building wealth over time. So, whether you are a beginner or an experienced investor, whether you're in business or an entrepreneur you'll enjoy my chat today with Mark Creeden, founder and CEO of Business Accelerator Mastermind as we discuss why seemingly rational people act irrationally when it comes to money. Cognitive Biases You Need to Know Without always knowing it, property investors are pre-programmed with a range of biases which may cause them to interpret information incorrectly and thus undertake sub-optimal investment decisions. You see, most of us think we're rational people but we're not. There is no shortage of cognitive biases out there that can trip up our brains. However, because cognitive biases are based on generalizations and assumptions, they can't always be correct. And if you don't check your reasoning, they can lead to judgments and decisions that negatively impact your business. Confirmation bias People tend to search for information that confirms their view of the world and ignore what doesn't fit. In an uncertain world, we love to be right because it helps us make sense of things. One way to counter confirmation bias is to read things you're going to disagree with. In other words, read all you can from reputable sources, whether it's confirming your original view or not. Anchoring bias We have a tendency to use anchors or reference points to make decisions and evaluations, and sometimes these lead us astray. This is because the initial price you set for a house or car or more abstractly, for a deal of any kind, tends to have ramifications right through the process of coming to an agreement. Whether we like it or not, our minds keep referring back to that initial number. It's important for you to evaluate any property deal based on its own fundamentals and all the information you have available from your research and due diligence at the time. Awareness bias How are your investments performing – are you happy with the results you're getting? It's been shown the poorest performers in all areas of life are the least aware of their own incompetence, a phenomenon known as the Dunning-Kruger effect. If you're the smartest person on your team you're in trouble. It's best to work with a team of mentors and professional advisors. Positivity bias In the face of lack of capital growth, prolonged vacancies, or inflated expenses, some investors continue to believe that their investment will turn the corner "one day." The problem with this is that when all signs point to a dud investment, it likely is one – but positivity bias can stand in the way of an investor taking action to rectify the situation. One of the best things an investor can do is admit what they don't know and get a good team of professionals around them. Negativity bias Just as some investors can be overly positive this is the tendency to put more emphasis on negative experiences rather than positive ones. Our ancestors evolved a brain that routinely tricked them into making three mistakes: overestimating threats, underestimating opportunities, and underestimating resources. This helped keep them alive. It's a great way to pass on genes, but a lousy way to promote quality of life or grow your wealth through property. Fact is: there will always be property pessimists around, but you can minimize your risks and maximize your upside if you educate yourself and become financially fluent, follow a proven strategy, and get a good team around you. Status quo bias This describes our tendency to stick with what we know, whether or not it's the best course of action. Psychologists call this "loss aversion" and it explains why so many Australians are willing to stick their money in a plain old bank account earning minimal interest, rather than taking the "perceived risk" of property investment. Successful investors, businesspeople, and entrepreneurs have mentors, coaches, and mastermind groups to help them see their blind spots and to encourage them to keep moving forward. Survivorship Bias The misconception here is that you should focus on the successful if you wish to become successful, while the truth is that when failure becomes invisible, the difference between failure and success may also become invisible. The trick when looking for advice is to not only learn what to do but also look for what not to do. Bandwagon bias This is the psychological phenomenon whereby people do something primarily because other people are doing it. The bandwagon effect has wide implications but is commonly seen during strong property markets where the media stirs up a frenzy and it's one of the factors that lead to asset bubbles. But when it comes to financial matters we know "the herd" is usually wrong – most property investors never build a substantial portfolio. It pays to remember that just because everyone else is doing it, that doesn't mean you should follow the crowds. Restraint bias Following on from bandwagon bias, restraint bias is the tendency for people to overestimate their ability to control impulsive behavior. Psychologists say the very people who think they are most restrained are also most likely to be impulsive. Bias bias Failing to recognize your cognitive biases is a bias in itself. Arguably this is the most damaging bias because having blind spots means you're less likely to recognize any of these psychological influences in yourself. Simply becoming aware of these biases means half your battle against your own worst enemy – yourself – is won. The bottom line: We all want to think we are rational and biases are things that afflict other people. However our brains are designed with blind spots and one of their clever tricks is to confer on us the comforting delusion that we, personally, do not have any biases. This is why so many of us are not only bad with money but make the same mistakes over and over again. Links and Resources: Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Why not join Metropole's Business Accelerator Mastermind Learn more about Mark Creedon – Business Coach to some of Australia's leading entrepreneurs Get a copy of Mark's new book here – Have a Business not a Job Get a bundle of eBooks and reports – www.PodcastBonus.com.au Shownotes plus more here: This may be exactly what is holding you back from being a more successful investor with Mark Creedon Some of our favourite quotes from the show: "It's actually not as much the investment, it's about the person." – Michael Yardney "In fact, it's been shown the poorest performers in all areas of life are the least aware of their own incompetence." – Michael Yardney "There will always be pessimists around, but I don't really know any rich pessimists." - Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

The property market is going to crash! How many times have we heard that one recently? 2021 was a year like no other - prices boomed creating new records and as the value of Australia's housing market skyrocketed, the collective wealth of homeowners jumped by over $2trillion despite the pandemic. And sure, it's clear that we won't see the same level of overall price growth in 2022. But a housing market crash? I don't think so, despite all the messages in the media suggesting it will occur. If you're a regular listener to this podcast or follow my blogs you will know that I have a weekly video chat with Dr. Andrew Wilson, Australia's leading housing market economist. Today's podcast is the audio of one of my recent chats with Andrew, who has an enviable record of property market forecasts and together we share 10 reasons why we don't think we're heading for a property market downturn soon. 10 Reasons Why the Property Market Won't Crash 2022 has already turned out to be a fascinating year in real estate. Last year was unusual when we experienced a once-in-a-generation property boom and values grew strongly almost everywhere. But now there seem to be more pessimistic forecasts about the short-term future of our housing markets than there are positive market commentators. If you've been watching our regular Property Insider weekly chats you would know that we believe property values will still grow this year, but more slowly and the markets will be much more fragmented, which of course is more normal. I don't want to minimize the horrors of war and the obvious humanitarian disaster that is occurring in front of our eyes. Nor do I want to downplay the terrible effects of the floods in Australia or the effects that supply shortages and rising global food prices will create in the developing world, but today I'd like to concentrate on some of the good news that can easily get lost and why I'm still confident about the future of the Australian Housing markets The average Australian is wealthier than ever It's been suggested there is a war chest of $230 Billion in household savings Many homeowners have 30% more equity in their homes than they had 2 years ago Aussie super funds and shares portfolios are performing well Overall the total residential property market is worth close to $10 trillion and there is only $2 trillion worth of loans owing against all residential real estate. Half of all homeowners have no mortgage ANZ bank suggests 70% of their borrowers are ahead in their mortgage payments It is estimated that $1.37 billion is sitting in offset or redraw accounts which would act as a buffer There's no evidence of mortgage stress for the majority of borrowers Interest rates are low and even when they rise, it will take 5 x 0.25% rises in rates to bring them back to where they were 3 years ago. And there was minimal mortgage stress then. Banks have been very conservative in stress testing loan applications and most who borrowed over the last couple of years will be able to handle the interest-rate increase of 2.5% or even 3%, and those who borrowed prior to these stricter requirements being brought in would have considerable equity in their properties Interest rates rose over a 6-year period commencing in 2002 and again in 2010-11 after the GFC yet the value of well-located properties continued to increase in most years that interest rates rose. Sure, many first home buyers have extended themselves and they will be the most vulnerable, but they'd rather eat Maggi Noodles than sell up their homes. Rising interest rates did not make the market fall in the past There is a shortage of supply of good properties at a time that Overseas Migration is going to pick up. Melbourne and Sydney will be the main beneficiaries of this. The same "experts" who are currently predicting that property markets will crash in 2023 are the same ones who have made multiple incorrect Doomsday predictions over the last couple of years. Our export income will improve because of the Russian Ukrainian crisis. Our tourist income will improve now that our international borders are opening. Australia's economy is growing strongly and will continue to do so and anyone who wants a job can get a job There's a shortage of rental properties, and rents will increase strongly this year, bringing more investors back into the market. Links and Resources: Michael Yardney Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Dr. Andrew Wilson, Chief Economist My Housing Market Subscribe to our weekly Property Insiders videos – www.PropertyInsiders.info Get your bundle of eBooks and reports at www.PodcastBonus.com.au Shownotes plus more here: Why are you worried? The property market won't crash. With Dr Andrew Wilson Some of our favourite quotes from the show: "In general, they'd rather eat Maggi Noodles than sell up their home, so they're not going to end up selling up and making the property market crash." Michael Yardney "To find success, sometimes you'll have to dismiss common beliefs." Michael Yardney "In my mind, diversification leads to averageness." Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

2022 promises to be a fascinating year in real estate. Last year was relatively unusual – we experienced a once-in-a-generation property boom where values grew strongly almost everywhere. Around 98% of locations across Australia recorded rising property values; with many properties rising in value by more than 20%. This year is shaping as a more "normal" market, where some locations will still see strong property price growth, some will experience moderate price growth, some locations will languish, and a few locations will see property values falling. And this will be dictated by local supply and demand and local economic conditions. New factors will further underpin our property markets this year. More investors will be getting into the market due to finance approval and higher rents. They will replace the first home buyers who are now finding properties less affordable. Around 200,000 visa holders will be coming to Australia in the next year as our international borders open. They will primarily be coming to Melbourne and Sydney where the jobs are Don't be scared by the property pessimists. Don't lose any sleep over the predictions that property values will drop 10 - 15% in 2023. In my mind the big banks' economists will be wrong – just like they were with their calls of property Armageddon in 2020. Property investment rules to keep in mind in changing times like these It seems that everyone is an investment genius when the property markets are booming. But even though our property markets have been resilient, in fact booming, the markets seem to be slowing down a little. And don't be fooled into thinking that all our economic and business problems are over. Now don't get me wrong – I don't think there's a property crash any time ahead, but I clearly see many headwinds that could slow us down – both international and local challenges. That's probably why I've been asked by both clients and the media what rules do I apply in times like this when the markets are changing in front of our eyes. Become financially fluent The secret to financial freedom is to spend less than you earn, save the balance and then wisely invest your savings in growth assets. Becoming financially fluent means you will invest rather than speculate. One of the reasons most investors don't develop the financial freedom they deserve is because they don't understand the rules of money and they end up buying their properties with emotion. Be it your first property or your next property, it should be part of a long-term plan and a stepping stone to building a substantial portfolio. By having a plan and a system to gauge the worth of an investment you will achieve better results. Learn to invest rather than speculate. Don't buy properties with emotion. Instead, you must start with a strategic property plan. First concentrate on building a substantial asset base over a number of property cycles, then slowly lower your loan to value ratios. Eventually, you'll be able to live off your cash machine. In other words, invest for the long term. Not every property is an investment-grade property Remember that while the location of your property will account for around 80% of its performance, it's also important to own the right property to suit the local demographic. Don't believe the hype Be careful who you listen to for advice. There are some great independent advisors out there, but the market is flooded with developers, property marketers, and real estate agents who don't really have your best interests at heart. Location does the heavy lifting Location will do 80% of the heavy lifting for your property's performance and that's why I only invest in select suburbs of our three major capital cities. Most jobs, most wages growth, most population growth and most of our economy happens in Australia's capital cities and in particular in our big 3 capital cities. Demographics drive markets Over the long-term demographics will be more important in shaping our property markets than the short-term ups and downs of interest rates, consumer confidence, and government meddling. Real estate investing is a game of finance with some properties thrown in the middle Cash flow management and the correct finance strategy is critical to successful property investing. This is little to do with low-interest rates and much more to do with having the correct finance product and setting aside financial buffers. The economy and our property markets move in cycles Property cycles vary in length and are affected by a myriad of social and economic factors and then, at times, the government lengthens or shortens the cycle by changing economic policies or interest rates. Market sentiment is one of the key drivers of property cycles and one of the reasons why our markets overreact, overshooting the mark during booms and getting too depressed during slumps. My 6 Stranded Strategic Approach to buying property: It's below intrinsic value — that's why I'd avoid new and off-the-plan properties which come at a premium price. It has a high land to asset ratio It's in an area with a long history of strong capital growth and will continue to outperform the averages because of the demographics in the area. With a twist — something unique, different or scarce about the property, and finally; Where you can manufacture capital growth through renovations or redevelopment rather than waiting for the market to do the heavy lifting. Don't focus on bargains — they rarely have a future Sure, we are experiencing fewer property transactions because of the effects of coronavirus, but there is a flight to quality and buyers have become more discerning. Think about it…Properties that no one else wants today will probably be the type of property that no one else will want in 5 years' time. Price is what you pay, value is what you get; so buy the best property you can afford. Allow for an X factor There are a few "X factors" every year — unforeseen events or situations that blow away all our carefully laid forecasts. Links and Resources: Michael Yardney Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Get a heap of eBooks and reports here: - www.PodcastBonus.com.au Shownotes plus more here: Here's why I'm bullish on investing in 2022 Some of our favourite quotes from the show: "Start investing as early as you can so you have time and compounding on your side." – Michael Yardney "Why fight the gorillas? Why fight the big trends." – Michael Yardney "Make a plan, but plan for your plan not to go to plan." – Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

Are New Year's resolutions powerful? Or are they pointless? Every year more than 50% of people make New Year's resolutions. They plan to lose weight, quit smoking, work out, save money, get a promotion, get a raise, move their business to the next level, buy that investment property, and more. And yet, virtually every study tells us that around 80% of New Year's resolutions will get abandoned by this time of the year. So maybe you didn't keep up that resolution to exercise more or go to the gym, but today in my chat with Mark Creedon, founder and CEO of Business Accelerator Mastermind, we're going to talk about how to make 2022 a great year for you. Have you lapsed on your New Year's Resolutions? Whether it's a small, (seemingly) easily achievable goal or a huge, life-changing goal, people tend to fail at the same rate: Approximately 80 percent of people who make New Year's resolutions have dropped them by the second week of February. Some reasons why your resolutions may have failed. You're treating a marathon like a sprint Small changes stick better because they aren't intimidating. You're in too much of a hurry If it was quick and easy, everybody would do it, so it's in your best interest to exercise your patience muscles. 3. You don't believe in yourself The only way to defeat doubt is to believe in yourself. Who cares if you've failed a time or two? This year, you can try again (but better this time). You don't track your progress Keeping a written record of your progress will help you sustain an "I CAN do this" attitude. You have no social support It can be hard to stay motivated when you feel alone. The good news? You're not alone. You know your what but not your why The biggest reason why most New Year's resolutions fail: you know what you want but not why you want it. So, here are 9 strategies to rescue those resolutions: You can't achieve new goals or make desired changes without allocating time to do so. To make this a better year you will have to do things differently from last year. There are obviously some things you are going to need to keep doing, some new things you will need to do, and a bunch of things you'll have to stop doing to make room for the new, more productive activities. Priorities should govern schedule; schedule shouldn't govern priorities. To have a better year this year you'll have to wrest control away from others' priorities and be governed by your own priorities. Resolutions aren't resolutions without resolve. So, don't bother making resolutions to appease or satisfy others. Be honest with yourself – that's a prerequisite for success. Resolutions require resources. You aren't really serious about a resolution unless you invest in and gather the required resources. Sometimes investment motivates follow-through since you've spent time, effort, and money on it. But don't be held back by limited resource thinking. If you are truly committed, you'll find the resources. Daily Progress Refuse to end any day without doing something that moves you toward the goal, no matter how small! Who motivates the motivator? Any professional sports coach will tell you: measurement automatically improves performance, and measurement monitored by someone else, further improves performance. Build up to change So, say you resolve to get up an hour earlier every morning to work on some projects. You could start with 15 minutes for two weeks, then 20 minutes for two weeks, then 30 minutes for a month, then 45 minutes for two weeks, and then you will find reaching the hour mark a lot more achievable. It's not too late to regroup! You may already have let your resolutions slip away. Doesn't matter. Review the resolution and pick one or two that mean the most and apply the 7 ideas I've just shared with you. Don't try and do it all on your own It's really hard to be successful on your own. You need to find an accountability partner, a group of like-minded people, a coach, or talk to me about Business Accelerator Mastermind and I'll show you how we provide all 3! Links and Resources: Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Why not join Metropole's Business Accelerator Mastermind Learn more about Mark Creedon – Business Coach to some of Australia's leading entrepreneurs Get a copy of Mark's new book here – Have a business not a job Get your free bundle of reports and eBooks – www.PodcastBonus.com.au Shownotes plus more here: Where did my new year's resolution go? 9 Strategies to rescue them, with Mark Creedon Some of our favorite quotes from the show: "Just because 98% didn't get past their first or second or third property (well actually 92% don't get past their second property) that doesn't mean that you can't." – Michael Yardney "One of the comments I often make is: you haven't come this far to come this far. So, keep going." –Michael Yardney "Nothing changes until you change, and part of changing is changing who you hang around with, who you get advice from, how you do things." – Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how